AppraisalNEWSCAST.com

Kan, Joel
Personal income increased by 0.4 percent, disposable personal income increased by 0.4 percent and personal consumption expenditures increased by 0.2 percent in December, the Bureau of Economic Analysis reported yesterday.

December data built on November’s increases, when personal income increased by 0.5 percent, DPI increased by 0.5 percent and PCE increased by 0.7 percent, based on revised estimates.

Real disposable income increased by 0.3 percent in December, matching November’s increase, while real PCE increased by 0.1 percent in December, compared to an increase of 0.4 percent in November.

Personal savings as a percentage of disposable personal income stood at 4.8 percent in December, compared to 4.5 percent in November. The December saving rate brings the fourth quarter average to 4.6 percent. Coupled with the 5.4 percent and 4.5 percent saving rates seen in the second and third quarter of 2009, respectively, this is the first time since the late 1990s that we have seen three consecutive quarters of a personal saving rate above 4 percent.

Real DPI–adjusted to remove price changes–increased by 0.3 percent in December, the same as in November.

Real PCE–adjusted to remove price changes–increased by 0.1 percent in December, compared to an increase of 0.4 percent in November, propped up by purchases of services and durable goods. Purchases of services in December increased by 0.4 percent, in contrast to a decrease of less than 0.1 percent in November. Purchases of durable goods increased 0.2 percent, compared to an increase of 2.3 percent in November, while purchases of nondurable goods in December decreased by 0.8 percent, compared to an increase of 1.0 percent the previous month.

The price index for PCE increased by 0.1 percent in December, compared to an increase of 0.3 percent in November. The PCE price index excluding food and energy, sometimes known as the Core PCE price index, increased by 0.1 percent compared to an increase of less than 0.1 percent in November.

Private wage and salary disbursements increased by $6.3 billion in December, compared to an increase of $25.1 billion in November. Goods-producing industries’ payrolls decreased by $5.2 billion compared to an increase of $2.9 billion the previous month. Manufacturing payrolls decreased by $2.2 billion in December, compared to an increase of $3.5 billion last month, and remained close to the historical low seen in June 2009. In contrast, services-producing industries’ payrolls increased for the ninth consecutive month, increasing by $11.5 billion, compared to an increase of $22.3 billion last month. Government wage and salary disbursements increased by $2.9 billion, compared to an increase of $1.8 billion.

(Joel Kan is associate director of research and business development with the Mortgage Bankers Association. He can be reached at jkan@mortgagebankers.org.)